Green Room

The Establishment’s False Solution to Public Debt

Ronald Brownstein argues that Wisconsin Gov. Scott Walker fought an unnecessary 1 1/2 year battle by responding to the state’s budget crisis “with a sharply ideological plan that targeted its pain almost entirely at Democratic constituencies.” He claims that it would have been better purse the “balanced approach” taken in the Nutmeg State:

In Connecticut, Gov. Dannel Malloy, also elected in 2010, closed a deficit as large as Wisconsin’s with $1 billion in spending reductions, $1.5 billion in tax increases, and $1.6 billion in union concessions. It wasn’t easy, but the plan ultimately drew support from public-employee unions (after initial resistance) and the chief executives of the major insurance companies that anchor the state’s business community. The fact that Malloy pursued tax increases and spending cuts made it easier to seek union concessions—and vice versa. “It was a balanced approach, and that made it easier to do that big ask of labor,” said Roy Occhiogrosso, Malloy’s senior adviser. “It was a big ask. But it was also a big ask of taxpayers and people who depend on the social safety net.”

An impressive story, if you rely on the governor’s adviser as your source of information. However, here’s what right-wing extremists from the New York Times reported on Connecticut in February:

Not everyone is so impressed. The rating agency Moody’s, which speaks a language familiar to Connecticut’s many financially inclined residents, downgraded the state’s debt last month, citing the high debt accumulated over years of borrowing as well as the depletion of the state’s “rainy day fund.”

The General Assembly’s nonpartisan Office of Fiscal Analysis reported the state had a $145 million deficit in January, when the Malloy administration was projecting surpluses. And critics, not limited to Republican lawmakers, have raised questions about how real his projected cost savings, including from his agreement with the unions, really are.

Oops. And this month, the Connecticut Mirror reports that the state continues to tap into its capital project accounts to pay its operating bills. In May, Gov. Malloy’s won approval of a plan to divert more than $200 million originally dedicated to pay off 2009 operating debt to instead close the current deficit. According to Connecticut Deputy House Minority Leader Vincent J. Candelora, despite more than $1.5 billion in state tax and fee increases ordered in May 2010, “revenues are not coming in at the pace that was anticipated and we are failing to achieve the budget (savings) that we were counting on.”

The establishment ignores all of this because to do otherwise would force them to confront the importance of public-sector unionism to the Democrats and thus center-left governance. The Cheesehead Days of Rage were fueled by Gov. Walker’s reform of some public-sector collective-bargaining rights and compulsory public-sector unionism (unions were willing to increase the employees’ contributions to their medical and pension plans), yet Brownstein treats it as a secondary or tertiary concern. As Jay Cost details in his new book, Spoiled Rotten, Democrats legitimized public-sector unions as private-sector unionism began to decline. However, private-sector unions depend on a growing private-sector, while public-sector unions depend on ever Bigger Government. The differences between the private-sector and public-sector bargaining almost inevitably produce the budgetary problems faced by Wisconsin and other states.

Establishmentarians like Brownstein want to avoid the ugly reality that the Wisconsin budget battle was about reforming a system in which: (1) government unions forcibly extract dues from employees; (2) government union officials enrich themselves; (3) government unions kick back donations and in-kind contributions to Democrat pols who defend them and promise substantial pension and medical benefits; and (4) legislatures fail to adequately contribute to public pensions and medical plans, while looking the other way at public pension accounting that would be criminal in the private-sector. Progressives will complain that public-sector union-busting harms women and African-Americans, who make up a disproportionate share of the public-sector workforce. They rarely mention that the establishment has been effectively defrauding the public-sector workforce for decades, let alone protest the Democrats and moderate Republicans most responsible.

Blowback

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CT: The largest Tax increase in the history of the state. Last years tax increase was larger than when the (temporary) State income tax was enacted. But we here in the Nutmeg state are seeing revenues fall way short of projections. That seems to happen every time, and we are looking at deficiets yet again. Even with the Fiscal year versues calendar year shennagians. The Governors lame justification to take an extra 6 months of increased taxes out of everyone’s paycheck who lives or works in CT:

“We tax on a calendar year and we budget on a fiscal year. No one really wants to do that but that’s how the two calendars interact.”

(unions were willing to increase the employees’ contributions to their medical and pension plans)…

Well, that is what they said after all the fleebagging and circle drumin’ anyway. The problem is the union heads threw this out as an 11th hour hail Mary but they didn’t have the authority to make the bargain. In order for such concessions the Union leaders would have had to bring it to a vote of their members first -and given the temper tantrums that were shown one can guess how that would have played which meanwhile either would have stalled a reform bill while waiting for the vote from the union members or which would have cratered the bill if it went through based on a promise the union had no power to make and which then couldn’t be enforced.

The union leaders of course know this but it is important to point this out as the media has tried to use this as a wedge to show that Walker was the uncompromising one when in fact he just didn’t enter a last minute deal that was proposed in what was (at best) bad faith.

In contrast, look who the current socialist is…we give the current candidate a chance, if he fails he’s out on his keister too…pretty simple stuff. No more hand-wringing about not having the “perfect” candidate – get the current destroyer-in-chief the hell out of our Whitehouse, NOW!

Apparently, this would be news to Brownstein and other establishmentarians who keep demanding “Grand Bargains” involving a “balanced approach” of “shared sacrifice” to public debt problems.

Tsk, tsk. Haven’t you gotten the memo? There is no establishment. Everyone except the radical fringe understands that big government is the wave of the future. What are you, some right-wing extremist Tr00Kon? ///

we give the current candidate a chance, if he fails he’s out on his keister too…pretty simple stuff.

ontheright on June 11, 2012 at 9:04 AM

I would love to hear the details on how we will “get rid” of Romney if he’s elected president and backstabs us with tax increases. Perhaps the same way we “got rid of” Boehner and McConnell after they proved unequal to the task of cutting spending after November 2010?

The fact of the matter is that if Romney blows it, a Democrat will be elected in his place, and then we’ll be right back where we started in 2009.

One thing that Mitt has promised that I find encouraging is to reduce Govt spending to 17% of GDP. Since it’s now around 25%, getting it back down to 17% would sure help turn the economy around. I think in this era even Mitt would take Gov Walker’s approach.

Man this is complicated. Are you trying to tell me that if we spend less we’ll have lower deficits? And not only that we won’t have to raise taxes which always lead to more spending,—-and deficits.
Actually it’s ordinary common sense. Brownstein doesn’t want his civil service babies to give some, but ok to stick it to the rest of the population. Government and it’s workers matter, nobody else. Corrupt !

Well written, concise and informative article. Too bad reality based common sense has to be published though. I found myself explaining those four basic concepts to a couple over dinner last Thursday. They are almost 10 years older and better off than me and had no clue about what the beef was in Wisconsin and how it applied to our under funded municipal pension plans in Houston (brought to us by dems and SEIU).

“with a sharply ideological plan that targeted its pain almost entirely at Democratic constituencies.”

On the other hand the Great Recession has targeted primarily Republican constituencies. You know, people who work and crate value in the private sector. Defined benefits didn’t get slashed in half like my 401k.